Google to buy TiVo?

By Chris Forrester

December 7, 2012

Not for the first time rumours swirl on Wall St about TiVo being a buy target. Now it is Google’s name that is in the frame as the potential buyer and it’s because of TiVo’s suit against Google-owned Motorola Mobility over alleged patent infringements.

Investment bankers Janney Capital’s analyst Tony Wible has tracked the latest batch of litigation between TiVo and Motorola/Google. He says: “The claims construction for TIVO’s upcoming litigation against Motorola/GOOG is in for the five patents involved and heavily favours TIVO, which prevailed in 81 per cent of the claims (5 per cent went in favour of Motorola and 14 per cent were split),” he tells investors. “These interpretations will make it much more difficult for Motorola to prevail in court as the prior precedent and the broader interpretations are harder to circumvent. Infringement on any one item creates a problem for Motorola.”

Wible estimates that if the court finds against Motorola/Google, and – say – awards TiVo a royalty of just 50 cents/month on Motorola’s 20 million installed set-top boxes then this could easily amount to a massive $700+ million damages bill.

Wible says it is cheaper to buy the company! “It may be one of the only cost effective ways to part with the Motorola unit and resolve the current litigation,” he argues. “Buying it would give them control of the patents while bundling TiVo with Motorola would have an significant edge over competitor Cisco, who is also in litigation with TiVo. Motorola would be more attractive with the TiVo software and a buyer could benefit from future Cisco damages. There is no indication there are acquisition talks, but any deal would need to be priced well above a 50 per cent premium to be attractive to TiVo holders (given legal prospects).”